Q2 2021 Allot Ltd Earnings Call
Ladies and gentlemen, thank you for standing by the conference will begin shortly.
We will be busy day.
EBIT to EBITDA.
[music].
Good day.
Good day.
Moving.
You bet.
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Ladies and gentlemen, thank you for standing by welcome to Allot second quarter 2021 results Conference call. All participants are present in listen only mode. Following management's formal presentation instructions will be given for the question and answer session.
A reminder, this conference is being recorded you should have all received by now the Companys press release, if you have not received it please contact <unk>.
Investor Relations team at GK, Investor and public relations at 16466883559 or view it in the news section of the company's web site Www Dot alone Dot com.
I would now like to hand over the call to Mr. Kenny Green of GK Investor Relations. Mr. Green would you like to begin.
Thank you operator.
Welcome to <unk>.
Welcome to a last second quarter 2021 conference call I would like to welcome all of you to the conference call and thank a lot management for hosting this call.
Also on the call today, almost everything right.
President and CEO and Mr. Ziv.
<unk> CFO.
Eric will provide a brief opening statement and summarize some of the key highlights from the quarter. We will then open the call from question session on both areas and it will be available to answer those questions.
You can all find the financial highlights and metrics include those we typically discussed on the conference call in today's earnings press release.
Before we start I'd like to point out that the safe Harbor statement.
This conference call may contain projections or other forward looking statements regarding future events on the future performance of the company. These statements are only predictions on allot cannot guarantee that they will in fact pickup alone does not assume any obligation to update that information.
So all of a sales may differ materially from those projected growth.
As a result sales impact due to the COVID-19 pandemic.
Ranging market trends reduced demand on the competitive nature of the security systems industry as well as other risks identified in the documents filed by the company with the Securities and Exchange Commission and with that I would now like to hand, the call over to Aaron Aaron. Please go ahead.
Thank you Kenny.
I'd like to welcome all of you to our conference call and thank you for joining us today.
They were slightly changing the format.
Press released you will be able to find all the numbers on tables I was jumping to release as well as those that <unk> previously used to share in the conference call.
Therefore, after my remarks will jump straight into Q&A on Ziv, and I will be available to answer your questions.
Our second quarter was another quarter of solid growth revenues grew 8% year over year.
On the second quarter on reached $35.3 million.
In the second quarter, we also reduced our non-GAAP operating loss by about 40% compared to the second quarter of 2020 and increased our total cash and equivalent to $105.6 million.
This is our 14th straight quarter of revenue growth year over year and I am very pleased with the results we achieved during the second quarter.
Also during the second quarter, we succeeded in signing several recurring security revenue deals for several of our allot secure product lines I am very pleased with these results and I believe it shows we are on track from successfully executing on our plan.
Our business is expanding across our product lines and markets and we are increasing our market share, especially in the cyber security business.
We'll describe in more detail as we see our opportunities growth, we continue to invest in order to capitalize on the significant number of opportunities that we are identified.
I want to start by describing what we see in our cyber security business and how the market is continuing to change favorably.
As I have said in previous calls on Lotus rapidly transforming into a cyber security company and this is where we see most of our future growth coming from.
There is a resolution happening in the consumer cyber security market.
Responsibility on securing the consumer the family and small business lies today was the individual <unk>.
Each person is responsible to protect himself or herself and their families and small businesses.
To do this they need to find the security app by App download it and install it on every 1 of their devices.
The problem is that regardless of how good or bad as security.
More than 90% of consumers don't do what I just described on our left unprotected.
This means that the current solution with end point security ops is not accessible enough to most people.
End users consumers and.
Small medium businesses are looking for a simple zero touch cyber security service.
Prefer a simple security service and not have to do anything technical like downloading an app to each device and configuring it.
While most people are practicing left unprotected.
Threats, such as phishing and others are growing.
We recently published a report showing that core consumers protected by allot secure in Europe. During a period of 3 months alone our security software block.
Wondered on 14 million attack attempts by the Snowball banking Trojan.
This is just 1 case.
But it clearly shows the level of threats people are facing on the instruments.
The resolution of shifting the responsibility from protecting the consumers and small businesses from the individuals who can.
CSP is indeed happening.
I like to use the analogy of water.
We buy Walker from the water utility company and expected to come to our phosphate states to drink.
Don't expect it to come Dirty on then has to figure out ourselves how to filter on purify the water. So that we can drink it.
Much the same the internet access our CSP provides us should be safe for us to use.
Currently we see a growing number of csp's worldwide that understand that this is no longer a nice to have on quote.
But rather becoming a quote must provide end quote.
And was this growing understanding so gross our pipeline of security as a service deals.
This is evidenced in the deals we signed on those we are working on <unk>.
Recently, we announced several security as a service deals.
2 contracts with CSP is in APAC.
1 contract with the CSP in Europe, and another contract with a tier 1 European group was operating entities in Europe and North America.
In addition, we have recently been selected by several Csp's in APAC and Europe, with whom we are currently negotiating the contracts.
In North America as I previously discussed.
Mark a change in the past 18 months is very clear.
Multiple north American Csp's or considering launching network based security as a service to their consumer and SMB customer base.
We are in discussions with source as well as with others.
We see North America as you know.
Opportunity and a focus area for on loans.
As we previously announced we intend to sign a security as a service agreement with dish to protect their mobile and fixed customers on the new.
New 5 G network dishes Bill.
While we cannot be sure that any other discussions selections and awards I mentioned will indeed results on contracts I am optimistic.
I believe the contracts we signed on the awards, we got our strong testaments to the positive change in the market and to allot strong position in the network based security market.
I would like to remind everyone of the allot business model in <unk>.
Pickle security as a service deal.
When we signed such a deal with an operator.
So it takes up on itself to provide all the required hardware software and professional services to enable the service.
We further assume responsibility for the support and maintenance of what we provided.
And provides significant marketing support to the operators marketing team.
In return, we ask for a share of the monthly revenue generated by the service or a monthly fixed subscription fee.
Operators worldwide can typically charts and network based security services.
You were from 5% to 8% of the consumers, our booth and much higher rates for the Smbs are.
Which can reach even 20%.
A lot will typically get anywhere from 20% to 50% of what the operator can charged to consumers or smbs, depending on various factors.
This is the preferred business model that most but not all operators worldwide except.
While each of the Csp's that decided to work with us.
Be interested in different parts of the allot secure product family. We are seeing strong demand for all elements of the allot secure enforcement abilities.
Network secure in the core network holds.
Home secure in the home router business secure on the SMB router DNS secure and also endpoint secure.
Our ability to provide such a wide variety of security enforcement capabilities.
Together with a unified management layer of allot secure management or ASM.
Are important differentiators and key to winning many of these USPS.
I am not familiar with other technology companies that provides such a broad unified experience across access means devices and threats.
While a lot of different competitors coming from different disciplines for each of its product lines allot as the only company that offers a comprehensive solution addressing such a broad range of consumer needs with a single unified management platform and also integrated policies.
Yeah.
I would like to say a few words about the penetration levels. We are seeing with no security as a service offerings that we have already launched.
And <unk> launched the service, we continue to see growth in number of consumers and smbs that sign up for the service.
Csp's that access security as part of their core offering and also the.
Service and multiple touch points show HIFU on exploration levels, even with customers sign up for the service separately.
For example in 1 of the operators when offered in a store we are seeing around 80% 8 zero of new customers signing up for the connectivity service.
Also signing up for the security service.
The lifetime value of customers, who sign up for the service is also higher.
And 1 of them are csp's, we see that even 1 and a half years after signing up for the service approximately 65% of those who signed up with a service stay with it.
This is in my opinion very strong evidence that the services value by the customers.
However, csp's debt launch it as just another value added service and quote.
With limited sales channels and less aggressive go to market plans share.
So lower penetration levels.
A lot has set up what I think is a strong marketing support service where.
Where we work together with the marketing departments of the CSP to show them the value of offering this service and broader sales channels and the right go to market plans.
As a result, we are seeing csp's appreciate the experience other operators are having and some are modifying their go to market approaches and significantly improving their results.
The number of operators closing deals and planning to launch is growing.
Covid.
Especially with new restrictions imposed on what's the current outbreak of the Delta area.
Causing delays in launches on various marketing activities.
While we are very encouraged by the penetration levels of operator, who operators who launched the service. These delays have a short term impact on our revenues.
In addition, we are finding operators, who decided to launch the security service with several several months of free service.
Spite our views on 1 month of free service would result in very similar take up rates.
Combination of the delay in launches on prolonged Reis services and have contributed to somewhat reduce the initial recurring revenues for us expected during 2021.
We expect our recurring security services in 'twenty, 1 do you want to be around $5 million.
When we look at our recurring security revenue growth plan.
We see our revenue is growing in 3 dimensions 1 signing.
Signing up on launching cyber security services with additional Csp's.
2 in our CSP that launched the service having more end users sign up for the security service.
3 CSP is expanding the security offering to the market from an initial market segment such as mobile.
2 additional segments, such as the home or off net protection or the SMB market.
I believe this threefold growth opportunity is was to make our recurring security revenues grow very rapidly.
Looking at the existing CSP services growth as we see it now.
The new CSP launches from existing contracts.
We expected launches from deals we were awarded recently.
We remain confident that in 2022, our recurring security revenues will be around $25 million.
Okay.
I would like to turn our attention now to <unk> networks and our opportunities there.
Securing entering at Axis actually consists of 2 aspects. The first that I described pool now.
Securing the end user access to the Internet.
But in addition, we also need to secure the operator's network itself, mainly the user play from.
Ddos or bot attacks.
As I discussed on previous calls I look has a unique position to play in securing the user plane and <unk> networks.
Our combination of being able to analyze in real time, the full traffic flow.
Our ability to mitigate ddos attacks in line very quickly.
<unk> protects the network flow.
Rogue Iot devices.
So on a unique position to help operators secure their 5 G networks.
A lot comes through the 5 G World was a very strong telco grade pathology.
Alex that scale easily to the 5 G bandwidth requirements and full multi tendency support to enable differentiated services.
These abilities are key differentiators for our 5 <unk> net protect product and future <unk> deployments.
Working with an operator to protect the growth day network itself and the axis by its customers is a powerful combination.
This is what we are planning to do for example in addition network.
Earlier this year, we announced that we signed a contract with a U S. Operator dish to use a lot 5 G. Net protect to help secure the user play of the 5 <unk> networks. They are building.
In addition design of a 5 G cloud Native network is the most advanced we are familiar with.
I view this as a selection of a lot of technology to help protect their network as testimony to our technology and implementation capability, which will serve as a great reference for other operators, especially in the North American market.
During the second quarter, we announced that we closed another 5 G. Net protect deal with a tier 1 CSP in APAC.
I can share with you today, but we have been awarded yet another tier 1 <unk> network and we are currently negotiating that contract.
I believe the growth of <unk> networks worldwide and the need for securing the network itself could become another powerful growth engine for allot.
To summarize I believe the market for cyber security services by Csp's to consumers and Smbs is taking off on our pipeline is stronger than ever.
I believe I believe a lot is uniquely on very well positioned to take advantage of this on growth significantly.
New deals with CSP still take time, usually between 12 and 18 months and was Covid, some even take 24 months.
1 side is usually it takes 9 to 12 months to launch the service and start gradually building our revenue base.
Ongoing COVID-19 impact may cause further delays of several months launching the services. After the deal is signed.
Factoring all of this as I explained earlier, we expect recurring security revenues from security deals in 2022 to be around $25 million and to keep accelerated growth year after year over year after that.
We also expect debt in 2021, we will sign new recurring security revenue deals totaling at least $180 million of M. A R.
Finally, I would like to turn now to discuss our visibility and control business addressed by our allot smart product line.
Revenue from this business is continuing to grow well for us on 'twenty 'twenty 1.
The main use cases, we see today and Csp's arent traffic management congestion management.
Quality of user experience, especially for video.
All of the CN charging control and digital horseman.
During the first half of 2021.
We were awarded several deals with operators requiring traffic management or visibility.
And some of these deals we will be replacing our direct competitors products that is installed.
Or we are being added to the network, where the CSP had until now used our competitors' product exclusively.
We are discussing multiple other opportunities with other csp's currently using our competitors' products and are working on expanding such deals that we won last year.
As governments look to fight crime and terrorism.
See our growing interest globally to be able to block illegal activities, such as drug trafficking child pornography or terrorism.
We're seeing growing interest in our products in this area as well.
Okay.
Our enterprise business is continuing to grow.
During the first half of 2021 our enterprise revenue grew about 17, 7 zero per cent compared to the first half of 2020.
The deal we signed in the beginning of 2020 with Broadcom to position a lot of the replacement for their practice to your product, which is at the end of life is contributing a significant portion of this growth.
We are signing new distributors for our enterprise products in multiple countries, including North America and Japan.
1 example is a deal we announced with the North American Government agency, which was brought to us by the buyer.
By a distributor who previously worked with Broadcom.
We expect continued double digit growth of the enterprise business and the remainder of this year is probably in 2022 as well.
To summarize I believe demand for allot smart product line, including congestion management traffic management analytics digital enforcement and enterprise use cases will remain healthy.
With single digit growth for a lot in the years ahead.
Yeah.
I would now like to summarize the overall picture on the key messages.
We are proceeding according to our plan on continuing to grow the business.
And the Allot smart product line, we see a strong pipeline.
People use cases, such as congestion management digital enforcement on the enterprise business are growing.
Overall, we see a solid demand for other small.
The security area is where do we see our long term growth.
We're very encouraged by the pipeline growth, we see and by the consumer and SMB take up rates as they sign up for the service.
We signed significant deals per our various products.
These deals always take time to close COVID-19 pushed to close several deals a bit more.
It is also postponing services commercial launch and some of the deals that were already signed.
Overall, the number of operators, we are closing deals with is growing worldwide and our pipeline of potential future deals is growing as well.
Looking at our backlog on the market demand as we see it now.
And the pipeline of deals that we are working on.
I would like to reiterate our revenue guidance for 2020, 1 between $145 million to $150 million.
Which includes about $5 million of recurring security revenues.
We further expect to sign additional recurring security revenue deals in 2021 with a total MAA are exceeding $180 million.
And now I would like to open the call for questions and answers and Ziv and myself will be available to take your questions operator.
Thank you ladies and gentlemen at this time, we will begin the question and answer session. If you have a question. Please press star 1 if you wish to cancel your request. Please press star 2 if you are using speaker equipment kind of with the handset before pressing the numbers questions will be polled in the order. They are a seat please standby while we poll for.
For your questions.
The first question is from Alex Henderson of Needham and company. Please go ahead.
Hey, guys.
So.
I wanted to just hit the enterprise peaceful but first can.
Can you remind me what percentage of net business.
Coming from the traditional business is coming from.
On the enterprise piece.
Last quarter it was 20%.
Year to date.
24%.
And last year it was 16%.
Alright, so 24 per cent of your business is growing at a 70% clip it seems like the.
The other portion of the business would actually have to be declining.
Are there to be at mid single digits.
I assume that you have.
<unk> done very well with the Broadcom stuff, but that's a diminishing.
You know tailwind over time can you talk about kind of the shape of that benefit and how that.
Transitions.
I assume that a good chunk of that installed base has already been converted.
It's actually taking yes first of all Youre right that the growth and the growth in your enterprise business as it is.
Primarily related to the Broadcom deal.
But it is taking the I'll confess longer than I had expected.
<unk>.
Where it takes us time to.
To convert it.
Distributors debt the bars.
Yeah.
To sign up with US we convinced other technology to go to go back to their customers and we didn't see as much even though we signed the deal with the Broadcom early in 2020, we didn't see this much.
Conversion or this much growth in the enterprise business in 2020, we are seeing the effect really now which is about a year and a half after we signed the deal with brought on so it is taking longer.
And I believe that we'll still see significant growth.
The enterprise business.
The remainder of this year now once we have these channels develop comfortable with us and so on I believe they will continue to bring us deals either as a convert from broadcom or from other areas that simply where it may be dealing with other customers or they had access with other offer.
Other technologies are they had access to previously and they were talking to us at all because they weren't working with us et cetera. So let's see I think I think the to summarize I think we will see the most significant effect. This year, we're not going to continue on 70% growth rate next year, no way, but I believe it will.
Still continued to grow on its taking longer than I had originally expected, but still its book.
So if I were to look at the traditional business and.
Take out the enterprise pieces, the rest of the service provider piece still growing or is that actually declining.
And I don't think it's a I don't think it's declining.
And you know really really changes it fluctuates from quarter to quarter, because enterprise businesses is sort of ongoing you say, it's many small deals.
Is the CSP the traditional traffic management, so CSP is much more lumpy in nature.
No I don't I don't see a decline at least in what I see the business in general could be that on the specific quarter. It may have gone a little bit up or down.
Depending on revenue recognition was with the Lumpiness of the AR.
Other deals.
When you have on an installed base.
<unk> of that technology.
Does that give you in <unk>.
Advantaged in doing the security business or is there no correlation between who you win on security and the installed base of traditional.
Okay, I assume you're talking about Csp's now.
Alright on the CSP side right.
It gives us it gives us some advantage because the customers familiar with US we know the network equal you know they have a reference already in house so to speak for themselves on how we are as they are.
<unk>.
Partner or how we are as a technology company and so on so it does it definitely gives us.
Some advantage, but many of the operators that we're signing we're signing up.
I don't know off the top of my head to tell you if its the majority of them are not.
But a significant portion of the operators that we're signing up for security are not BPI customers for us.
2 more quick questions.
1 day.
$5 million.
Outlook for the for the year on profit.
On the revenue from security that's not on the material change I mean, I think we were at 6 before so I mean, it's a pretty de Minimis change in the outlook is that is that correct.
So it's like a $1 million kind of thing.
Youre absolutely right.
Okay.
Not a big deal 1 way or the other assessing price statistical noise.
I wanted to go to the.
Open ran wins.
We don't really have a handle on this business in terms of the size of the opportunities the timing of the ramp of those businesses.
And sort of the mechanics around it could you go through some of that.
Give us some sense of when you sign a deal.
Big is it.
How long does it take to get to revenues.
The slope on the revenue growth.
Post <unk>.
Installation.
And when you said the open ran are you referring to the <unk> networks.
Yes.
It's yes it is.
It depends it.
Supposedly it will be similar to to say, our DPI business right, let's assume we're talking about net per day, if I cannot protect from <unk> networks.
Would.
It should be a similar to our DPI business since in the sense that okay. We get we get a contract then we go on and install it we integrate with the rest of the stuff from and we bought acceptance.
I'd say that depending on the operator, how fast they are how much. They are you know how.
How much testing they wanted to do before they turned it operational it could take anywhere from 6 to 12 months in a regular deal inside the added factor to that is that some of these networks don't yet exist right.
Dish is this is not is not running on commercial <unk> network, yet so we sold on software.
We're working with them to integrate that into the network that they are all day.
So it could potentially take longer.
But I would say that you know still a 6 to 12 months per regular GP ideal probably in other you know another 3 months or so from a 5 G network because they eventually they put it on is probably reasonable.
Or are these all perpetual.
The <unk> net protect deals are all perpetual.
License or at least.
Yeah, they're all they're all capex based on deals right.
Perpetual licenses.
Sure.
Yeah.
When we when we do and hope for example, hopefully we will do shortly.
Security as a service deals on 5 G. Those those will be recurring security revenues.
1 last question on the Mar calculus for the year are you ahead of your.
On target.
Feeling better about the outlook in line with the outlook worse in the outlook any granularity on terms of where you are on that $180 million plus target.
If you remember also last year.
We did say that the.
Most of the room on the.
EMEA Alcon Park.
<unk> contract will sign on.
Second half of the year.
The other kinds of.
Is your trend in the market most of you.
On the second half of the year.
And I think this year also will be similar.
Through last year the same trend.
However.
We feel confident that we will meet our guidance.
Guidance.
1 on with an $80 million.
<unk>.
Okay, I will cede the floor. Thanks.
The next question is from Eric Martin Newsy of Lake Street. Please go ahead.
Hey, guys. Congrats on the good quarter I have a question also regarding the slight revision in the security revenue for 2021.
If I had it right. There was it was in part driven by delays due to Covid and then in part driven by.
Marketing choices made by the carriers, just wondering and I know, we're talking small numbers, but just the difference between the 2 what's weighing more on the.
A new ramp for those see cash.
2021.
All right.
Yeah.
The changes are so small it's not.
It's hard for me to ex.
It's hard for me relates to differentiate between the time they are about the same order of magnitude.
Okay, and then focusing just on the marketing side you guys have a ton of experience with this.
You've done it globally.
You're working with new customers, who are signing up on C kit, what's the change and B. How are you changing how you are communicating with those marketing department. So that they can benefit from your experience.
And we are.
It's I think it's that we're changing the way we communicate with them yes.
The benefit from our experience is available to them before we signed the deal on after we signed the deal with.
It's our vested interest right to share as much experience as we can with them.
On and get them on board and show them, how great they and us can do together with us.
And I think that's it.
The change in the.
And the way we are approaching them.
Is.
As we're spending more time today than we did in the past on showing them growth and bad examples of growth Tomorrow.
And we're trying to get.
There are management's commitment to a more aggressive growth.
Well go to market.
Yeah, even prior to signing the deal because we think that's a that's really key.
Getting a successful result.
It's also yes, we have 1 operator for example that that started with the go to market plans, but we didn't feel comfortable with.
And it took several months and they said okay. Okay. We understand it's not doing that well also tell us how they do it definitely will.
We kept telling them all the time how to do it differently now they are changing and they're doing better.
We would rather have them sign up we're doing better from day 1.
So we're trying to we're trying to work with these operators you actually set very ambitious goals within sales they want because that drives a lot of the changes that they are a lot of the growth market plans on how they they address it just to begin with.
So that's the main change.
Okay, and then with these these new wins that you're landing and congratulations on that.
Really a string of pearls that surely assembling here.
Most of these.
Just.
Just curious what are they doing something previously using their own product or a competing product or nothing at all.
Some of these operators would we're not doing anything.
Some of them were reselling their endpoint security apps from various customers from sorry from various.
Companies such as <unk>.
On the Mcafee or F secure.
Well there are multiple other alternatives.
None of them were doing anything on their own technology I'm not.
Any operator that has their own technology to provide security as a service.
Okay.
Okay.
Alright, and then my last question has to do with the operating expenses going forward.
I'm looking at the GAAP Opex for Q2 of $28.3 million.
And to figure out what's the right number to be using in Q3 Q4 outside of the variable comp and the sales and marketing.
This is <unk>.
This a good run rate to assume or are there other things to consider.
I would say this.
The Opex in Q3, and Q4 will be higher than the Opex in Q2.
We have.
On the open position that we Didnt record EBITDA.
So and we hope to recruit those people in Q3 Q4.
And these are engineering or sales.
Namely mainly R&D people.
Yeah.
Okay. Thanks for taking my questions. Good luck.
Thank you.
The next question is from Marc Silk from Silk investment Advisors. Please go ahead.
Thank you for taking my questions. So.
To date, how many recurring revenue deals have you signed I have a number might head, but I just wanted to make sure I have the right number not necessarily that you're generating revenue, but that you've that are.
Signed in.
Ready to go on the future.
We are fine.
15.
Pick up deal.
But less than 60% of them.
Really launch the services.
Okay, and then that's actually more than I thought so that's great.
How many of these do you think we'll be able to launch the service before the year is over.
Okay.
I guess, it's right at the beginning of.
Next year.
2 sales of them to launch the service.
Okay.
And then out of these 15, how many of these do you think youre going to basically I've been taking your advice as far as how to market. This.
Yeah.
Yeah.
We cannot give you an accurate on soon.
Because.
We don't know the on 38 pink.
I think about the customer.
Yes.
This.
A few customers signed agreement in Q2.
Now we are starting the process of implementation and as you'll recall, we said disposals might day, even 1 year.
Part of the profit.
On the go to market strategy.
So we don't have a definitive answer those.
Our customer.
Okay I'll ask that sometime next year and then on the 5 G. After your first few deals with dish and others is that.
<unk> increased your exposure as far as basically maybe getting inbound calls on as far are making it easier for your sales team to sell this product.
I'm not familiar with anything that makes it easy to put the sales team.
But it definitely growth difficult.
It definitely gives no reference to say, okay. This is others others.
Others have tried or tested it and trusted us and so on so it made it gives them more credibility when they walk into an account.
Alright, it sounds like you're you're calling on the right direction as far as you are on long term strategy. So keep it going and congrats on a nice a nice progress and.
And thanks for taking my questions. Thank.
Thank you.
Yeah.
The next question is from Alex Henderson Needham <unk> Company. Please go ahead.
Hello, guys.
Alright.
You got to put the receiver back on.
Yes, I just wanted to go back to them.
The outlook on the on the Mar stuff for a second.
As we look at the size of the transactions that are in the pipeline.
Have you seen any shift in terms of the number of tier ones that are engaged versus.
Tier 2 tier threes, what what is the.
The scale of the.
The people on the pipeline looks like.
Yeah.
Thank you.
Oh, that's right.
And almost intuitively because they don't have such a breakdown number in front on me, but I think the number of tier ones, where we are talking to is growing.
And it's true.
The mix is still there right, we're talking to a smaller operator as larger operators and so on but I think the number of tier ones is growth.
When you answered that question about the number of deals that you've done does that include.
Both.
Share deals as well other opex deals as well as Capex sales.
No Jeff just Opex here, just the CCAR opex deals.
Starting from 2019 first along well.
And.
When you look at those.
Those are companies that are in the pipe.
1 of the key variables here is the degree to which they are willing to take.
Your advice and on the marketing side do you see any increased willingness among.
The other.
People in the pipeline to listen to the marketing knowledge that you've built on.
Or are they less willing to I would assume that that's actually improving in terms of quality.
I think it's from I think it is improving somewhat it's not where I would want it to be yet we still have a way to go but I think it's included.
Okay, and then just going back to.
To the sizing of these.
<unk>.
Does it.
Do we think about that as having.
Any relationship back to the.
Lamar opportunity once you've signed at <unk> does that give you an opportunity in that space.
As well to sign up for the.
The security as a service to their customers or is that independent.
It's independent.
But I can't tell you know like was.
Like what.
What I said on the on the <unk>.
<unk> or other PPE ideals.
Once we get into an account and we start working with the.
They become more familiar with a little more comfortable with us as the vessel day.
See our technology people and so on so it's an easier in Europe for us to discuss other products as well.
It doesn't do anything but it does give us on opening on.
I think even a little bit more.
We are almost always discussing a new network that's not there for gene.
We're always discussing okay, there's an existing towards the network, they're putting something in place.
On the technical team that's dealing with it.
The marketing people are not interested in DPI cohorts right. They don't.
I don't see that in 5 G everybody in the company and the operator is interested in what's happening with the spike what are they going to do with it I wasn't going to be put together, what's the schedule per building how's it going to be state differentiations et cetera. So it's given us a wider reach of people I think when we talk to them.
Operating on their <unk> networks on <unk>.
Give us if we talk on.
On securing for epi on <unk>, so in that sense, it's a bit better, but it doesn't guarantee loans.
Just to be clear when you're talking about 5 G. Here Youre talking about <unk> core as opposed to 5 day ran 4 G core.
Yes, when I talk about quite a G I mean.
Quote unquote real financing.
We're the <unk>.
It's a core network not just not just when an operator uses the same <unk> network and just replaces the frequency on the ramp.
2 to expand really provides <unk> services.
And then.
When you were talking about the security transactions you'd said that you were seeing.
A number of competitors in the bids.
Can you talk to what kind of products. So those people offering is that just simply DNS services does that.
On the Mcafee installation software product type.
<unk> offerings.
There anybody else doing anything remotely.
What you guys are doing.
In line.
Security Claire.
Cleaning.
I think there's there you know we have.
2 seconds of background on Ulster question.
As a reminder, we have.
The ability to provide security.
Operating in multiple locations multiple what we call enforcement points..1 is in the quarter from network, which is our network secure 1 is on the router.
<unk> secure if its a whole roberts business secured some new.
The DNA.
BNS secure on the BNS query line.
And of course, we can augment that with an off network protection with endpoint secure.
Now in each of these enforcement point products.
There is there are different competitors.
On the whole secure on business secured we secure the router.
We're competing with companies like <unk> Joe.
Hum.
Yes.
Startup costs on their various companies.
We then built a solution for that.
When we compete on.
On.
On what we.
Talk about enforcing security.
Core net work.
I'm not familiar with anyone else that actually does that we end up with competing conceptually with either security securing it in the core or securing the DNS axis slot.
That's a fine or different competitors typically it's it's akamai and per work with 2 main ones that we see there.
And but we don't see anybody.
Is that that takes a holistic and.
That has the holistic capability.
Having all these multiple enforcement points and a unifying.
Management layer that make sure that the.
Regardless, what the enforcement point is online offline has the same management say single pane of glass for both the user.
On the operator.
On the St policies and so on so we're seeing companies compete with us in different areas, but nobody has.
The whole package.
Do you have a sense of what your hit rate should look like given those that context.
Yeah.
It's.
Now it depends how you count it because at the end there are operators that decide to go anyway for.
Okay.
We're just reselling the endpoint security in which case you know we don't have work that's not our game with since the endpoint security could augment network based security book.
<unk> has to be net.
It will replace Securities I think a network based security our hit rate is.
I think it's very hot.
Great.
Oh.
If there are any additional questions. Please press star 1 if you wish to cancel your request. Please press star 2 please standby, while we poll for more questions.
The next question is from really want Wallace of Outerbridge capital. Please go ahead.
Thanks for taking my questions I was just wondering it seems that we're seeing a lot more marketing and consumer cyber security solutions here in the U S.
For example from AT&T active armor and other types of products.
Was just wondering if you think that's accelerating.
Activity, specifically with some of the CSP as you're speaking with and how you are feeling in general about those opportunities.
As I said I think debt.
Real activity in the U S.
Sure.
Change is rolling on.
More operators in the U S are looking to launch network based security services.
When I say more 18 months ago they would.
Most not interested on today's there are quite a few operators that understand that they need to do something.
Some of them are moving faster some slower.
Hopefully some of them will close this up.
I think that what we're seeing.
In marketing all kinds of solutions.
In the U S mostly on.
No.
On the network base.
The walkway areas are seeing the necessity to provide a security solution to their to their customers on what we're seeing is part of that.
Got it and then I just wanted to confirm you said.
I believe you.
Additional field.
After the end of the quarter that hadn't yet I guess.
Sure.
It turned out that rate in Brazil with tier 1.
No I'm not.
I'm not sure I understood.
Not sure I follow.
Okay.
We said that we were selected by maybe they were frankly as I said that we were selected by several operators.
And instead of course security as a service deals on but we're negotiating those contracts.
This means that we work on.
Yes that was what I was asked.
You bet.
We haven't yet been announced but they are in final discussions now.
Correct, because we have not signed the clock bucks on.
They said Theres no theres no guarantee that we will sign the contracts, but I'm optimistic.
Understood. Thanks, a lot for taking my questions.
My pleasure. Thank you.
Okay.
There are no further questions at this time, Mr. On Kathy would you like to make your concluding statement.
Thank you operator.
Yes, so on and thank you all for joining US on this conference call on listening in.
We are we are unfortunately, not yet traveling.
But we will be happy to hold virtual meetings with investors. So if you'd like to meet with US please be in touch with our Investor Relations team.
Beyond that look forward to talking to.
Our next quarterly call and stay safe and healthy thank.
Thank you very much.
Thank you. This concludes the <unk> second quarter 2021 results conference call. Thank you for your participation you May go ahead and disconnect.
Okay.
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Sure.
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